Consumer products manufacturer Procter & Gamble (P&G) announced that its domination and profit transfer agreement with Wella had been registered with the commercial register in Darmstadt.
The agreement became effective upon registration, and is valid for Wella's current shortened reporting period (1 January 2004 to 30 June 2004). Wella shareholders approved the agreement during the company's annual shareholder meeting on 8 June 2008.
Pursuant to German company law, Wella is now controlled by and will have its annual profits transferred to P&G. Under the terms of the agreement, P&G is also entitled to give instructions to Wella's board of management.
Wella's management believed the agreement, which aimed to strengthen collaboration efforts between Wella and P&G, would ease operational decision making, and improve Wella's ability to respond more effectively to future market demands.
P&G anticipated that the agreement would create greater efficiency in achieving previously stated business plans and collaboration synergies. Additionally, the domination and profit transfer agreement would improve knowledge transfers between the two companies.
P&G's chairman, president and chief executive AG Lafley said: "The deal further expands P&G's beauty businesses across Eastern and Western Europe, and in Latin America.
"Wella's strength in professional hair care complements P&G's strength in retail hair care. By bringing these complementary businesses together, we create significant opportunities for top and bottom line growth in hair care," Lafley added.
P&G expected the Wella transaction to add sales of about €3.4 billion to its overall beauty business. P&G said it expected to keep Wella's professional salon business largely intact.